U.S. Treasury yields climbed on Thursday following Federal Reserve Chair Jerome Powell’s warning that new tariffs could fuel inflation and hinder economic growth. His comments left investors cautiously re-evaluating the central bank’s next moves.

The 10-year Treasury yield rose by approximately 5 basis points to 4.333%, while the 2-year yield edged slightly higher to 3.8%. Bond yields rise as prices fall, and one basis point equals 0.01%.

Powell, speaking Wednesday, noted that tariffs backed by the White House could place the Fed in a difficult position—trying to tame inflation while also supporting a potentially slowing economy. He cautioned that the institution may soon face a situation where its two primary goals—price stability and maximum employment—could conflict.

“If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close,” Powell said.

Despite rising concerns, analysts from Deutsche Bank suggested that the Fed is unlikely to act hastily. They noted Powell’s reassurances that, while markets are navigating significant uncertainty, they remain orderly and do not currently require intervention.

Meanwhile, fresh jobless claims data released Thursday came in lower than expected, adding a layer of complexity to the Fed’s balancing act as it monitors both inflationary pressures and labor market resilience.